Particularly in recent times, it has become very challenging to raise money for small business start-ups, including restaurants, from traditional sources of lending such as local and national banks. However, if the business case is strongly made and the idea has been validated by a good business plan and financial estimate, there is a good chance that funding will be made available, subject to a number of factors.
Any financial institutions’ primary concern in giving you a loan is understanding the ability of the business to pay back that loan while still making a profit and giving you a living. If there isn’t sufficient comfort for the bank in this assessment, then…quite simply….you haven’t a hope of getting money from them without a miracle. A bank will also want to see other indications of the extent of your assets and your ability to run the business responsibly, including but not bound by the following:
- Career or Business History
- Ownership or participation in other businesses
- Net Worth Statement
- Criminal Record
- Tax Records
If the bank considers you eligible for a loan, they may wish you to provide some collateral in the form of personal assets. While it would be your decision to agree to provide these to the bank, we would strongly advise against using personal assets such as residential property or personal home. The risk you take should be no greater than you can afford, and risking your home to open a restaurant is not advisable.